Rising Prices and Larger Flats Impact Affordability in Real Estate Market
The decline in residential sales is not just due to rising property prices but also because realtors are pushing for larger-sized properties, making them unaffordable for many buyers.
Real Estate MarketProperty PricesAffordable HousingResidential SalesHousing AffordabilityReal Estate NewsJul 06, 2025
According to Mayank Saksena, CEO of Land Services at Anarock Property Consultants, developers are not making as many one and 2BHK (bedroom-hall) apartments in cities such as Bangalore as they used to. “Mostly they are focusing on 3 and 4 bedroom apartments,” he said.
Saksena's observations are backed by data. The share of 1BHK units in overall residential sales in Bangalore has declined from 9% in June 2022 to 6.7% in June 2025, while the share of 2BHKs has dropped to 27.2% from 40% in the same period. On the other hand, the share of 3BHKs has increased from 45.3% to 52.7%, according to TruBoard Partners.
In Gurugram, the share of 1BHK apartments in sales has remained less than 1% over the past three years, while the share of 2BHKs has decreased to 7.7% from 23.7%. The share of 3BHKs has also fallen to 46.3% from 53.9%, indicating that developers are now focusing on even larger flats.
For Mumbai, the share of 1BHKs in sales has decreased from 34.6% in June 2022 to 28.3% in June 2025. The share of 2BHKs stands at 42.3% compared to 43.6% previously, while the share of 3BHKs has increased to 21% from 18.7% three years ago, as per TruBoard data.
Anarock’s Saksena noted that 3BHK apartments in Bangalore now have an average size of 2,200 sq ft, compared to 1,200 sq ft for a 2BHK. Prices have tripled in the last five years to an average of ₹15,000 per sq ft, and apartment sizes have almost doubled. “So the increase in prices and sizes has made it unaffordable for many. This phenomenon is not limited to Bangalore; other cities have also experienced similar trends,” he said.
Vivek Rathi, National Director – Research, Knight Frank India, agrees with Saksena. “With ticket prices rising, affordability has become a significant issue for many people. They are left with no choice but to buy properties in far-off suburbs,” he said. Property prices have increased by 20-60% in most cities since 2020. Big developers have moved away from affordable housing due to the economics involved, and smaller players in this segment have struggled.
The average residential prices across top cities rose 11% year-over-year in the June quarter, with Delhi-NCR leading the pack at a 27% increase, followed by Bengaluru at 12%, according to Anarock Research.
A head of a Mumbai-based NBFC reported that sales have been hit by 15-20% across all segments, whether affordable or luxury. “In markets such as NCR, investors are almost out as prices are no longer rising,” he said.
Compounding the issue, the loading—the difference between super built-up and carpet area—has also increased, leading homebuyers to pay more for common areas and receive less liveable space. The average loading in leading regions like Mumbai Metropolitan Region (MMR), Delhi NCR, and Bengaluru has surpassed 40%, up from around 30% in 2019, according to a recent Anarock report.
In response to the subdued sales, developers are now launching smaller 3BHK and 4BHK apartments in cities like NCR and Mumbai. “Early indicators show a growing preference for smaller, well-connected units, and price increases that outpace income growth have further constrained market momentum,” said Sangram Baviskar, founding member and CEO of TruBoard Partners.
Baviskar noted that the industry’s focus on larger, premium apartments has widened the gap between new supply and buyer demand. Amit Bagri, CEO of Kotak Mahindra Investments, observed that buyers today do not feel a sense of FOMO (fear of missing out) and have many options in cities like Mumbai and Bangalore. “They believe prices are not going to rise quickly and are saying, ‘Let’s wait for six months,’” he said.
Other experts pointed out that buyers are well-informed and making smart choices in the face of declining affordability. For Tata Realty & Infrastructure, sales have been down due to lower launches caused by legal issues regarding environmental permissions, some micro-markets peaking in terms of prices, and an exhausted client base. Its MD & CEO, Sanjay Dutt, said sales were down in previous quarters due to a wait-and-watch attitude among buyers, influenced by the global geopolitical situation and fears of a recession in global markets due to tariff wars.
Frequently Asked Questions
What is causing the decline in residential sales?
The decline in residential sales is primarily due to rising property prices and the trend among realtors to focus on larger-sized properties, making them unaffordable for many buyers.
How have apartment sizes and prices changed in recent years?
Apartment sizes have almost doubled, and prices have tripled in the last five years, making properties significantly more expensive and less affordable.
What is the impact of increased loading on homebuyers?
Increased loading, the difference between super built-up and carpet area, has led homebuyers to pay more for common areas and receive less liveable space, further reducing affordability.
What are developers doing to address the decline in sales?
Developers are now launching smaller 3BHK and 4BHK apartments in cities like NCR and Mumbai to cater to the growing preference for smaller, well-connected units.
How are buyers responding to the current market conditions?
Buyers are well-informed and making smart choices, often opting to wait and see if prices will decrease, and they are increasingly looking at properties in far-off suburbs.
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